Re: Suggestions for mid term savings/investments?

jdbst56@[EMAIL PROTECTED]
 writes:

[Vanguad Short-Term Investment Grade Bond fund]
> > of +12.74% and +7.07%).  That fund is VFSTX.
> 
> I assume that a fund like VFSTX would be exempt from federal tax but
> not state tax (PA tax is 3.07%)?

Nope.  It's all (almost all) cor****ate debt - bond issued by
companies, not governments, and thereby the income is taxable
at both federal and state levels at your regular marginal
income tax rate.

Vanguard does have a short-term bond index fund which is
about half cor****ate and half government debt - some (but not all)
of that one's income would be exempt from state income taxes.

In both cases, cap gains are taxable regardless.

> It seems to me that the general consensus says that it is not worth it
> to try to squeeze an additional 1-2% at the risk of principal loss.
> For the sake of argument, at what point is it worth it?  Maybe it

At the point where you can say "well, I didn't really need all
that money that soon anyway, and can live with some short- to mid-
term losses along the way".

Suppose you had a "buy a new car fund" and you planned on buying
some particular car in 5 years.  Unless you can either live with
waiting a few more years, or accepting the possibility that you'll
have to get a less expensive car, you need to invest that money
more conservatively.  If you're willing to risk the Hyundai for
the chance that you'll get a Lexus instead of guaranteeing
yourself a Honda, it may be worth taking your chances.  Only
you can decide.


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